CSDR compliance for financial market infrastructure
The Central Securities Depositories Regulation sets the rules for securities settlement in the EU. Matproof automates CSDR compliance — from settlement discipline to internalized settlement reporting.
Request a demoKey Features
Settlement Discipline (SDR)
Monitor and report settlement fails. Automated cash penalties calculation, buy-in process tracking, and settlement efficiency reporting.
Internalized Settlement Reporting
Quarterly reporting of internalized settlement volumes to national competent authorities. Automated data aggregation and report generation.
CSD Authorization & Supervision
Document authorization requirements, capital adequacy, and prudential requirements for CSD operations under Title III.
Participant Risk Management
Monitor participant default risks, collateral requirements, and stress testing obligations under CSD rules.
Cross-Border Access & Links
Manage CSD links, notary and settlement services access, and cross-border interoperability requirements.
ESMA Regulatory Reporting
Generate regulatory reports in the format required by ESMA and national competent authorities. Automated submission tracking.
Why Matproof
Customer stories
Teams that made compliance simple.
Matproof saved us months of audit preparation. We connected our tools on Monday and had DORA-mapped evidence by Friday. Our auditor was impressed by the depth of the audit trail.
Katharina Steinbach
Head of Compliance · Novalend GmbH
We were staring down a DORA deadline with three frameworks to cover. Matproof got us audit-ready in under four weeks. The policy generator alone was worth the subscription.
Florian Bergmann
CTO · Paymatic AG
The cross-framework mapping is genuinely brilliant. We already had ISO 27001 — Matproof showed us exactly what DORA added on top without duplicating controls. No consultant could do this in the same time.
Dr. Annika Brandt
CISO · Kreditwerk Digital
Our last audit finished with zero findings. First time in company history. Matproof's continuous monitoring caught a configuration drift two weeks before the auditors arrived.
Maximilian Vogt
VP Engineering · Finova Technologies
Vendor risk was the section we dreaded most for DORA Article 28. Matproof auto-generated our entire ICT third-party register from existing contracts. What took our legal team weeks took Matproof an afternoon.
Julia Hoffmann
Legal & Compliance · FinLeap Connect
Three frameworks — DORA, ISO 27001, SOC 2 — running in parallel on one platform. Matproof's shared evidence library means we collect evidence once and it satisfies all three. The efficiency is remarkable.
Thomas Kessler
Head of IT Risk · Solaris SE
What is the Central Securities Depositories Regulation?
The Central Securities Depositories Regulation (CSDR, EU 909/2014) is the European Union's framework for regulating central securities depositories and securities settlement. It harmonizes the authorization, supervision, and operational requirements for CSDs across the EU, while also establishing a settlement discipline regime to reduce the number of failed securities transactions in European financial markets.
CSDR has three main pillars: authorization and supervision requirements for CSDs (Title III), prudential and conduct of business rules for CSD services (Title IV), and the settlement discipline regime (Title II, as implemented through CSDR-RTS). Together, these rules aim to ensure the safety and efficiency of securities settlement infrastructure that underpins all European capital market activity.
The Settlement Discipline Regime (SDR) — which entered into force in February 2022 — is the element most relevant to a broad range of market participants. It introduces mandatory cash penalties for settlement fails and a buy-in framework, both of which require significant operational and reporting capabilities from trading venues, CCPs, CSDs, and their participants.
Who Needs to Comply with CSDR?
CSDR compliance obligations apply to different entities depending on which provisions are at issue:
Central Securities Depositories
- Full CSDR authorization and supervision requirements
- Prudential requirements (capital, insurance, liquidity)
- Conduct of business rules and participant access
- Settlement discipline — penalties collection and buy-in
- Reporting to national competent authorities and ESMA
Market Participants
- Investment firms and credit institutions settling EU securities
- Cash penalty obligations for settlement fails
- Buy-in exposure management (where mandatory)
- Settlement internalisers: quarterly Article 9 reporting
- Operational changes to reduce settlement fail rates
CSDR Key Requirements
1. Settlement Discipline — Cash Penalties
CSDs must calculate and collect cash penalties from participants causing settlement fails, and pass those penalties to the receiving participants. Penalties accrue daily from the intended settlement date until actual settlement or buy-in, at rates varying by instrument type. Market participants must track their settlement fail positions, ensure systems can receive and reconcile penalty invoices, and report on settlement efficiency to their boards.
2. Buy-In Procedures
Where settlement fails persist beyond defined timeframes (4 business days for liquid instruments, 7 for less liquid, 15 for SME shares), the receiving party (or the CSD/CCP on its behalf) may initiate a buy-in — purchasing the financial instruments from a third party at the failing party's cost. Participants need operational processes to initiate, manage, and settle buy-in procedures, including selecting buy-in agents and managing the cash differential.
3. Internalized Settlement Reporting (Article 9)
Settlement internalisers must report quarterly to their national competent authority on the total volume and value of settlement instructions settled internally (outside a CSD). Reports must be submitted within 20 working days of the end of each calendar quarter using ESMA's prescribed XML format. Competent authorities forward this data to ESMA, which publishes aggregated statistics on internalized settlement activity across the EU.
4. CSD Authorization and Operational Requirements
CSDs must obtain authorization from their home member state competent authority before providing core services. Authorization requirements include capital adequacy (minimum EUR 7.5 million), insurance or equivalent arrangements, participation requirements, business continuity arrangements, IT security requirements, and outsourcing controls. CSDs must also comply with ongoing conduct of business rules, participant access rights, and data reporting obligations to national authorities and ESMA.
Frequently Asked Questions about CSDR
What is CSDR?
CSDR (Central Securities Depositories Regulation, EU 909/2014) is the EU regulation that harmonizes the rules governing central securities depositories (CSDs) — the entities that hold financial instruments such as shares and bonds in electronic form and settle securities transactions. CSDR establishes authorization and supervision requirements for CSDs, prudential and conduct of business rules, and a settlement discipline regime to reduce settlement fails across EU financial markets.
Who is subject to CSDR?
CSDR applies directly to EU-authorized central securities depositories (CSDs). However, the settlement discipline regime (SDR) also applies to investment firms, credit institutions, central counterparties (CCPs), other CSDs, and market participants that are counterparties to transactions admitted to trading on EU trading venues or cleared by EU CCPs. This means a wide range of financial institutions involved in securities settlement — including brokers, custodians, and asset managers — must comply with settlement discipline requirements.
What is the CSDR Settlement Discipline Regime?
The CSDR Settlement Discipline Regime (SDR) entered into force in February 2022 (cash penalties) and includes two main components: cash penalties and buy-in procedures. Cash penalties are imposed on parties responsible for settlement fails, calculated daily based on the type of financial instrument. Buy-in procedures allow the failing party's counterparty (or the CSD/CCP acting on its behalf) to buy in the financial instruments from a third party when settlement fails persist beyond specified timeframes (typically 4-7 business days). The European Commission has proposed amendments to the buy-in regime, making mandatory buy-ins optional rather than automatic.
What is internalized settlement reporting under CSDR?
Article 9 of CSDR requires settlement internalisers — entities that execute transfer orders on behalf of clients or on their own account outside a CSD — to report aggregated information on internalized settlement to the relevant national competent authority on a quarterly basis. Reports must include the total number and value of settlement instructions settled internally, broken down by financial instrument type and settlement failure rates. ESMA has published technical standards specifying the format and content of these reports.
How does CSDR interact with DORA and NIS2?
CSDR, DORA, and NIS2 have significant overlap for financial market infrastructure participants. DORA applies to CSDs as financial entities, imposing ICT risk management, incident reporting, and third-party oversight requirements that complement CSDR's operational requirements. NIS2 applies to financial market infrastructure as an essential entity sector, adding cybersecurity requirements aligned with CSDR's operational resilience obligations. Matproof's cross-framework mapping helps identify overlapping controls and shared evidence, reducing duplication across all three frameworks.
What are the penalties for CSDR non-compliance?
For CSDs, CSDR violations can result in fines of up to EUR 5 million for natural persons or up to EUR 20 million or 10% of annual turnover (whichever is higher) for legal persons. Competent authorities can also withdraw CSD authorization, prohibit activities, and issue public notices. For settlement discipline, cash penalties for settlement fails are calculated at defined basis points per day — ranging from 0.1 bps/day for liquid shares to 1 bps/day for SME shares and illiquid instruments — applied to the cash value of the settlement fail.